U. S. Government Printing Office
Office of the General Counsel
Contract Appeals Board
Appeal of Majestic Industries, Inc.
March 14, 1977
Vincent T. McCarthy, Chairman
Jay E. Eisen, Member
Barbara J. Faulkner, Member
Panel 76-10
This is an appeal filed on August 31, 1976, by Majestic
Industries, Inc., hereinafter referred to as "Contractor" or
"appellant", pursuant to the disputes clause of the contract, GPO
Form 198, United States Government Printing Office Contract Terms
No.l, Article 18. The General Counsel has been designated by the
Public Printer to determine appeals under the disputes clause.
Findings of Fact
(a) This case arises out of a contract entered into by the
appellant and the U.S. Government Printing Office, hereinafter
referred to as GPO, for the production of 175,000 3-ring 3/4"
plastic "camouflage" binders. On June 26, 1976, an additional
500 binders were ordered (F.E. 4); and on July 19, 1976, an
additional 1646 were requested by the ordering agency, HQ TRADOC,
Fort Monroe, Virginia, for a total of 177,146 binders. (F.E.8)
(b) The contract, designated as GPO Jacket Number 638-344,
Purchase Order No. E0571 (F.E. 11A) is a fixed price agreement
for the procurement of 3-ring polyethylene binders, awarded on
April 23, 1976, at a cost of $46.90 per 100, or a total of
$82,846.97 for the 177,146 binders ultimately supplied.
(c) The specifications required the contractor to furnish
camouflage binders "to fit sheet 8" x 10 1/2" punched with 3
round holes, diameter C to C on the left 10 1/2" edge. Binder
size to approximate 11 1/2" x 9" (F. E. 11A). A sample from a
previous printing was furnished by GPO and mentioned under the
headings of composition and printing to serve as a model for
color and composition. (F. E. 11(A) p. 2.)
(d) The shipment schedule required the model to be furnished by
April 30, 1976, and shipment to be completed by June 29, 1976.
However, as the model was not received by the Contractor until
May 8, 1976, an extension of the shipping date was granted until
July 8, 1976. Partial shipments were accepted by the ordering
agency, HQ. TRADOC, Fort Monroe, Virginia, as follows:
June 29 114,796 binders
July 4 19,168
July 6 41,536
July 20 1,646
177,146
On July 13, 1976, the GPO Hampton Regional Printing Procurement
Office received notification from TRADOC that the binders did not
conform to specifications in that "the front and back covers were
11 1/2'' x 9 7/8" instead of the specified 11 1/2" x 9". (F.E.
6) Although the binders were considered usable despite the
discrepancy, HQ. TRADOC recommended that the contractor be
"penalized", because the binder "was for the capstone 'How to
Fight' field manual in the Army and [was] much larger than
desired or order." [sic] Other reasons for the Army's
recommendation were that the manual "was cumbersome to use
because the edge of the cover overhangs the text by over an inch
. . . the cover tends to curve around the text edge giving a
shoddy appearance . . . and the delivered binders do not fit
properly on book shelves with the other 40 'How to Fight'
manuals." (F.E. 6)
(e) On July 15, 1976, the contractor was notified by mail that
the binders did not conform to specifications and that a
deduction of 4% of the contract price would be made from the
Contractor's account. (F.E. ll(c)). The Contractor thereupon
filed its formal notice of appeal by letter dated August 31,
1976, submitting such evidence on its behalf as is contained in
F. E. ll(A), (C), (D) and (E). Exhibit (B), in the contractor's
possession, is the sample sent to it by the ordering agency after
the bid was awarded. Its overall dimensions, according to the
contractor, are 11 1/2" x 9 7/8". (F.E. 11)
Questions Presented
The questions presented are:
(1) whether the binders manufactured under this contract
conformed to the specifications; and, if not,
(2) whether the 4% deduction from the contract price was a
proper measure of damages.
Opinion
The contractor argues that the 11 1/2" x 9 7/8" binders produced
under the contract were in conformance with the specifications
because the industry standard binder measures 11 1/2" x 9 7/8",
the sample furnished by the government to the contractor also
measured 11 1/2" x 9 7/8", and because the specifications
required the binders dimensions to approximate 11 1/2" x 9" (F.E.
ll(D)). Since the ambiguous specifications were created by the
GPO, the Contractor contends, the government should bear the
responsibility for any deficiency in the end product.
A detailed examination of the specifications, however, clearly
reveals that the binders produced by the Contractor did not
conform to the dimensions ordered by HQ. TRADOC. Although the
ordering agency required a product to approximate 11 1/2'' x 9",
it received instead a product measuring closer to 11 1/2" x 10."
The Contractor claims that the specifications were confusing and
ambiguous, in that the sample provided by the GPO measured 11
1/2" x 9 7/8". However, a thorough reading of the specifications
is sufficient to show that the sample was to serve as a model for
composition and color only, rather than overall construction:
"Composition: None. Camera copy and a complete set of offset
positives furnished. Contractor also to receive a sample from a
previous printing. . . .
"Printing: Clear, sharp silk screening in green (2 shades) and
black. Covers 1 and 4 bleed top, bottom and outside. Match
furnished sample for colors." (F.E. ll(A), page 1 and 2)
The Contractor appears to base its claim that the specifications
were ambiguous upon the use of the word "approximate". Without a
doubt, the employment of such a word introduces a certain amount
of indistinctness in regard to the exact dimensions of the
product required. However, the effect of its use is not to
permit the contractor to ignore the specifications and
manufacture a product almost a full inch larger than the 11 1/2"
x 9" desired.
As to just how much leeway the term "approximate" allows, the
United States Court of Appeals, Ninth Circuit defines it as
meaning "approaching or nearly." Tonkoff v. Barr, 245 F.2d 742,
at 749 (1957). Webster's new collegiate dictionary defines the
word "approximately" to mean "nearly correct or exact". (G & C
Merriam Co., 1974) Furthermore, a government survey of a number
of sources in the ring binder industry shows that the term
"approximate" is interpreted by the industry to permit a leeway
of 1/8" to 1/4", not 7/8'' of an inch. Since Majestic has
produced a product "approaching or nearly" 11 1/2" x 10" rather
than 11 1/2" x 9" it cannot be said to have conformed to
specifications.
The Government is entitled to a product which has been
manufactured in conformance with the specifications. Inasmuch as
the evidence clearly shows that the Contractor has failed to meet
the specifications, that portion of the appeal is denied.
The second question is whether the 4% deduction from the contract
price was a proper measure of damages. The general rule of law
in regard to one who commits a breach of contract is that the
offending party must make compensation therefor to the injured
party. "In determining the amount of this compensation . . . the
aim in view is to put the injured party in as good a position as
he would have had if the performance had been rendered as
promised." (5 Corbin on Contracts 992, page 5).
The 4% assessment against the contractor in this case, although
improperly characterized as a "penalty", is a proper measure of
damages, being a fair and just amount to put the government in
"as good a position as it would have had" if the performance of
the contract had been rendered according to specifications.
Therefore the contractor's appeal of the deduction of 4% of the
contract price is denied.
For the foregoing reasons, the entire appeal is denied.